Market capitalization (market cap) is the total value of a company's outstanding shares of stock. It is calculated by multiplying the stock price by the number of shares outstanding.
Market Cap Categories
- Large cap: $10 billion+ (stable, established companies)
- Mid cap: $2-10 billion (growth potential with moderate risk)
- Small cap: $300 million - $2 billion (higher growth potential, higher risk)
- Micro cap: Under $300 million (speculative, high risk)
Why Market Cap Matters
Market cap helps investors understand a company's size, risk profile, and growth potential. Large caps tend to be more stable, while small caps offer higher growth potential with greater volatility.
